What bumper US growth means for funds, stocks and currencies /
The US releases its strongest quarterly GDP levels for four years
New figures reveal the US gross domestic product (GDP), expanded by 4.1% during the second quarter. Although slightly below expectations this still represented the fastest rate of growth since 2014.
The update reflects the relative buoyancy of the US economy which have also evident in strong corporate earnings and UK investors with holdings in US-focused funds and companies such as Ferguson (FERG) who bring in most of their cash across the pond could benefit.
The Artemis US Select Acc Fund (BMMV510) which is aimed at capital growth has already gained 13% in three months. JP Morgan US Equity Income Fund (B3FJQ59) has returned 10.7% in three months. STOCKS
The aforementioned Ferguson is a building materials distribution company which makes over 90% of its profits in the US hence it changed its name from Wolseley to the title of its US division last year.
This company has been on the ascent this year, the shares gaining 17.7% since March. For a cyclical company like Ferguson that needs a strong economy to really make money, the GDP data will be good news. When economies do well, orders go up and Ferguson’s goods are required.
On a slightly smaller scale, marketing products company 4Imprint (FOUR) also makes the lion’s share of its money in the US and on 31 July it reported results for the six months to 30 June which were ahead of expectations. A feat it has achieved consistently in recent years. It is also heavily tied to US growth.
While the best GDP numbers since 2014 should be seen as a positive developments, the forex markets reflected the high expectations ahead of the release and the dollar actually dipped in the wake of the news. (DS)